Tuesday Morning


Sentiment Watch: Market may be on borrowed time but continues to fight its way higher in an early week data vacuum. The recent rally has been well timed for the end of October options and I am at 77% cash now and not immediately rolling to longer dated calls in my favorite names. After the close today we get reports from Dow component INTC and JPM reports before the open on Wednesday, all of which will be market moving in this twitchy market. No economic data today but that changes mid week as well (see Calendar tab).

Housekeeping Watch: Please bookmark the backup site:  http://zmanbackup.wordpress.com

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today
  5. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $31,300
    • 77% Cash
    • The Current Holdings Tab Is Updated.
  • Yesterday's Trades:

    • HK – Sold (20), which is all, of the HK $25 October Calls (HKJE) for $1.35, up 228% with the stock at $26.20. I continue to hold 80 of the HK $26 calls here.
    • NFX – Sold 15 of 20 NFX October $45 calls (NFXJI) for $1.95, up 63%. Still raising a little cash.

Commodity Watch

Crude oil rose $1.50 to close at $73.27 yesterday on the back of a strong equity market (at least it was in the early going) and a weak dollar.  This morning crude is trading up towards $74 as the dollar weakens again, falling through 76 and its most recent lows.

  • OPEC Watch: The Cartel lifted its 2010 demand forecast by 200,000 bopd to 28.39 mm bopd, a 700,000 bopd increase over 2009's depressed levels. OPEC noted that a majority of the pickup in demand will come from recovery in transportation and industrial/petrochemical consumption.

  • Early Read On Oil Inventories:

      • Crude UP 800 K barrels
      • Gasoline UP 1.5 mm barrels
      • Distillates DOWN 275K barrels – I bet this creeps lower into Thursday’s report.

Natural gas recovered 11 cents to close at $4.88 yesterday, the result of stronger crude and heating oil as the coldest weather of the season to date penetrates further into the country's mid section. This morning gas is trading down about 5 cents.

  • Imports Watch: 7.9 Bcfgdp, down 0.9 Bcfgpd from last week and 0.5 Bcfgpd from last year.

        • Canada: 6.7 Bcfgdp, down 1 Bcfgpd from last week and 1.1 Bcfgpd from last year.
        • LNG: 1.2 Bcfgpd, up 0.1 Bcfgpd from last week, up 0.5 Bcfgpd from last year.


Crack Spread Update

Key Takeaways: My TSO calls will expire worthless. I continue to watch the group but the inability of the group to make anything more than 1 or 2 day advance before being squashed back is tiresome.

Stuff We Care About Today

Solar Multiple

Earnings Preview Thoughts For FSLR:

I have been long FSLR during the last two conference calls and while they won't announce earnings for a another few weeks I think it is worth thinking about them again:

  • Both times I got the top and bottom line numbers I was looking for and in the case of last quarter, much better than what I was for.
  • Both times I got the improvements in efficiency I was looking for and more.
  • Both times management has managed to snatch defeat from the jaws of victory.
  • Will I play FSLR for earnings again for their 3Q call? Call me a sucker but most probably I will (although maybe not all the way through the call).
  • I think we see another good sized drop in cost per watt, and possibly a bottom line beat with solid top line performance
  • Margins are expected to roll over as price competition from traditional crystalline polysilicon has been intense due to global over supply. Management indicated on the last call that margins would come down and the Street is looking for a large drop 10+% and then more flattish thereafter.
  • On the last the "snatching of defeat from the jaws of victory" came in the form of a rebate program. Speculation ran wild after the call that every customer would want in.
  • This quarter should/could prove that the wave of feared rebates did not crush the numbers.
  • FSLR continues to win the biggest contracts for solar installations as a module supplier but is branching out into project management (with the potential to be a turnkey supplier) and this should show up in revenues this quarter.
  • In recent quarters two big fears were credit tightness and an end or easing of subsidies in Germany, their biggest market, if the government changed hands. Credit has eased substantially and the government remains in Merkel's hands and I think subsidies are unlikely to go away anytime soon. 
  • Valuation - as you can see in the chart above FSLR no longer trades at a hefty premium to its higher cost per watt peers, so I think as long as they stay out of trouble on the call there is room to move higher.
  • I plan to play with two tranches, one more near the money set of Novembers and higher strike set of December Calls.
  • I'll take a look at (SPWRA) in tomorrow's post.

Trading Action in PQ and GMXR makes them look to be in play. I've heard no recent rumors but the strength in both names has been impressive. Short interest remains high for GMXR and above average at PQ and their asset packages would make them attractive to a number of mid cap E&Ps who recently did debt and/or equity deals.

CHK Analyst Meeting Tomorrow

Odds & Ends

Analyst Watch:

  • (CRZO) cut to Neutral at SunTrust on Valuation

155 Responses to “Tuesday Morning”

  1. 1
    BirdsofpreyRcool Says:

    z — some funky symbols (instead of graphs) above… but, other graphs came thru… so, go figure.

  2. 2
    zman Says:

    Thanks BOP, actually not graphs, I transferred part of the post last night to word and back thinking I’d lose it. That’s just bad formatting, will try to clean it up. Site seems faster from my end.

  3. 3
    BirdsofpreyRcool Says:

    TechTrader thinks the best odds (60/40) is for the SHORT trade this morning. That doesn’t mean he thinks the mrkt closes in the red necessarily, just that his best odds for a day trade are from the short side.

    HeadTrader is in a bad mood… but he sloughed off Meredith Whitney’s downgrade of her last “buy” in the financial sector this morning. The desk is long C, by the way.

    Credit back to work and leading a rally charge this morning.

    IG 100 1/2

    HY 93 11/16

  4. 4
    zman Says:

    Private E&P Chaparral to IPO, ticker CPR (which will be the butt of many jokes should it flounder). Mid-con and Permian Basin player, fairly oily (45% of reserves), long lived reserves. They’ve been in capital conservation mode, they have Granite Wash acreage.

  5. 5
    BirdsofpreyRcool Says:

    who is the equity sponsor at CPR?

  6. 6
    zman Says:

    Analyst Watch: Lazard ups DRYS to Buy

    BOP – don’t see that yet, I’d bet DB and Morgan Stanley. Chap was fully drawn on their revolver earlier this year at about $600mm, has been on a 1 rig diet since to my knowledge. Equity coming of $1.8 B so balance sheet gets cleaned up, will have metrics in a report when I know more.

  7. 7
    zman Says:

    It will be interesting to see how they price it on a reserves basis and to see the market’s appetite for a new E&P player (not new, been around two decades and is 3rd largest oil producer in Oklahoma but newly public).

  8. 8
    zman Says:

    BOP – not also they are merging with a financial player prior to the IPO, conf call on that tomorrow.

  9. 9
    BirdsofpreyRcool Says:

    z — meant, who was the Deep Pockets behind the company… but was going to ask the underwriter question next… so thx for reading my mind!

  10. 10
    zman Says:

    NG getting whacked for 20 cents in fast trading, don’t see the reason for the pre market slump yet other than more sellers than buyers.

  11. 11
    BirdsofpreyRcool Says:

    oooooooooo…. it’s one of those SPAC things. Ugh. I have had some pretty lousy experiences with those structures. They keep changing them, to try to address the issues, but it’s never a completely “clean” deal.

    Who knows. Might work out well this time, tho. NM was a spac… but, they had a heck of a time, trying to deal with the warrant holders.

  12. 12
    jy Says:

    What’s a SPAC???

  13. 13
    zman Says:

    BOP – Hear ya. I generally take a look at the new ones when they come out, pretty cursory with my yea/nay on it like I did here with SD, CLR and PINN:


    Did pretty well with that piece as I liked SD and CLR and put the “no like” stamp on PINN (now 37 cents).

  14. 14
    zman Says:

    SPAC = special purpose acquisition company

  15. 15
    zman Says:

    Analyst Watch: Pritchard cuts CLR to Neutral.

  16. 16
    BirdsofpreyRcool Says:

    SPAC = Special Purpose Acquition Corp. aka a “blank check” company…. aka a shell with cash, looking for a good idea to acquire. But, there are warrants attached to the SPAC shares that can be an overhang. Also, some of these things were done in haste (as there is an expiry on the cash shell). Probably not this one… but, have seen some bad decisions, rolled into a SPAC, just to beat the expiration deadline.

    The SEC hates these deals. I have learned to greatly dislike them too.

  17. 17
    zman Says:

    Anyone with Southcoast research feel free to send along the HK upgrade to Strong Buy from yesterday, thanks.

  18. 18
    zman Says:

    Way to go JNJ and Meredith W. for the GS downgrade. This is why I’m 77% cash. Broad market matters a lot more at the moment than oil or natural gas prices.

  19. 19
    BirdsofpreyRcool Says:

    not to mention, CIT ch11 looking ever more likely.

  20. 20
    zman Says:

    Right, not to mention that. Still, mostly wall of worry type stuff, no black swan in there.

  21. 21
    BirdsofpreyRcool Says:

    no. not at all. Frankly, it would prove that we were moving away from “too big to fail.” Without failure, you can’t have a free mrkt.

  22. 22
    BirdsofpreyRcool Says:

    btw, C is up… and that is a pretty sensitive indicator of “risk” these days. Short-covering ahead of earnings out this week? Maybe… but, buying is buying… even if it comes from the shorts.

  23. 23
    zman Says:

    Hey, good point, no argument from me.

    CNBC’s Epperson proving once again she can ignore big moves with the best of them, no comment on the 5+% down open on NG. Maybe she dropped covering it to focus on gold. Ugh.

    Natural choice for people selling their high priced CLR today is WLL.

  24. 24
    zman Says:

    BOP – looking at the giant swoon in the markets so far (Dow down 20, SP down 3) the shorts have got to be eating their hats.

    Amazing resilience in the gassy names like SWN with gas still tumbling lower, now down nearly 30 cents, 6%.

  25. 25
    BirdsofpreyRcool Says:

    even TechTrader (with his 60/40 SHORT call today) is only looking to take out a few points, with that trade. No… the bull mrkt is in tact. Even the MW downgrade of GS was just on valuation… not underlying trends.

  26. 26
    ram Says:

    Nicky, is your crazy Ivan due today or tomorrow and is it positive or negative?

  27. 27
    zman Says:

    BOP – seeing a lot of valuation calls for downgrades in E&P. Not that those don’t have merit as the stocks approach the upper end of their historic trading ranges be they either P/CF or TEV/EBITDA or $/Mcfe of proved reserves or some other metric. But often, the importance of those calls is very fleeting, last a day or sometime less in the thought process of the market. If the group can continue to move up and is largely not overvalued, as is the case with the E&P crowd at present as long as we see say $6 gas next year and $75 oil, then the leaders will more often than not, continue their leadership within a few days time of digesting the downgrade.

  28. 28
    zman Says:

    ZTRADE – WildZ

    Added (20) of the HK $26 October calls (HKJP) for $0.20 (easily on the mid) with the stock down 2.7% at 25.13 on a weak market, weak group day. This is obviously I high, high risk trade.

  29. 29
    BirdsofpreyRcool Says:

    Although credit has sold off with stocks, the IG index is still tighter (higher) for the day. The desk thinks shorts are pressing… and if the selloff continues (or any relief rally is weak), then the shorts will press into the close.

    Didn’t really expect a 7th green day in a row. Need to back-and-fill… so, that is what we are doing.

  30. 30
    zman Says:

    BOP – agree that there are plenty of lower gaps to fill in the broad indexes. An INTC beat (which I sort of doubt) could reverse the market higher tomorrow as could retail sales, GS, GOOG etc. But I will say this is not enough to get me interested in November contracts …. I’d like to get this week over with first.

  31. 31
    BirdsofpreyRcool Says:

    z — agreed. this may not be the only down-day this week. And — at some point — I expect the DOWN to be rather severe.

  32. 32
    bloodystupidjohnson Says:

    Another option question Z, how do you decide which strike price to buy? For example with SD you could buy the 12.50, the 14’s or the 15’s. Does it depend on your conviction on the stock or what?

  33. 33
    bill Says:

    contrarian thought of the day

    buy swn puts??

    q3 cant be that great
    fully priced

    any other over extended names?


  34. 34
    zman Says:

    BSJ – yes, that and the premiums on the options themselves. I don’t have a formula but I take a lot things into account including:

    * potential for catalysts for the underlying issue,
    *valuation of the common relative to its peers,
    * time to expiry as it relates to the potential catalyst,
    * the characteristics of the options themselves (I’m not a greeks guy but I pay attention to delta and its decay).
    * and put those things in context with the backdrop for the market and oil and gas (in the case of it being an E&P stock).

  35. 35
    zman Says:

    SWN – more pricey than some but cheaper than other high beta names like RRC and UPL. I won’t be taking puts there as they have the potential to put up higher IP and EUR numbers from recent even longer reach laterals.

    WLL – Is the cheap name in the Bakken, despite the run with 2010 CFPS est > $12, that’s about 5x fwd CF which isn’t high. Yeah, its run but it fell too far in the first place. CLR would be my choice if I wanted to Put an oily name in the Bakken oil space which I don’t. Beats are likely due to higher than expected oil prices relative to analyst price decks (estimates still drifting higher) and due to better than expected Bakken oil well performance.

  36. 36
    Nicky Says:

    Morning all. Ram what is crazy Ivan?

  37. 37
    ram Says:

    “A turn.”

  38. 38
    ram Says:

    Zman, why would you think that there is no consistency with text messages on ZTRADES?

  39. 39
    Nicky Says:

    Ah okay. Well market is starting to run out of time on the upside but that does’nt mean it is here and now. I can see a case for the top being in or us still being in wave iv and needing another brief move up. If we see the latter I am not expecting it to go much higher. The down move when it comes should be swift.

    Silver has caught my eye this morning. Quite the fall off the highs. Gold looking more corrective on the downside right now.

  40. 40
    zman Says:

    Ram – I’m told by some on the ZTEXT list that they get them late or not at all. It seems to vary by cell carrier whether or not they go through.

  41. 41
    bloodystupidjohnson Says:

    SPAC = give us the money, we will do something with it, trust us, would we lie to you?

  42. 42
    zman Says:

    Agreed re some SPACs. In this case however, CPR is a 21 year old firm with proved assets and they are buying the SPAC, not the other way around.

  43. 43
    zman Says:

    GMXR acting like its in play. I own the common for the asset value, have had difficulty playing the options there in the past.

  44. 44
    BirdsofpreyRcool Says:

    Whether CPR “buys” the SPAC, or the other way ’round, is just accounting. Basically, a SPAC “merges” with (usually) a private company. It’s a way to get cash in the door for the private company, and a way for the mngmt team of the SPAC to get paid (for “finding” the private company).

    Oh… and the main buyers of SPACs are hedge funds… ‘cuz you can do all sorts of very creative things with the stock and warrants.

    I’ve seen SPACs work. And I’ve seen SPACs blow up. But a SPAC adds complications that a normal IPO does not. I’d rather play in a cleaner sand box… JMHO.

  45. 45
    ram Says:

    Oh, O.K. It’s not consistant.

  46. 46
    zman Says:

    BOP – my point was it wasn’t set up with cash to acquire assets and thereby make up a new company out of said asset but was incorporated into a 20 year old firm with proved reserves on the books. But I hear ya. I’ll give a lot more weight to the valuation of the reserves and to cash flow… if they come at a discount there is potential for appreciation as they have some assets which could be big drivers of a public stock.

  47. 47
    oklahoma Says:

    Z- have a feel for GMXR valuations in terms of a “go out” price? x times cf/sh?

  48. 48
    zman Says:

    Oklahoma – no, higher. Lousy answer but it depends on the buyer’s willingness to value the probables and possibles under their acreage. GMXR has said in the past they get to a $400 NAV but they are dreaming. If it goes in the near term I’d bet on something more like $25.

  49. 49
    BirdsofpreyRcool Says:

    z — #46 yes. Exactly right. That is how a SPAC works. They acquire a going concern and the SPAC mngmt steps aside and lets the existing company take over.

    It’s how Jamba Juice went public… and Navios Maritime too. Just to name a couple. But both private companies existed before being merged into a SPAC.

  50. 50
    zman Says:

    BOP – I defer to your SPAC expertise as I’ve not been involved in one directly. I’ve seen them work and fail too. I was just thinking that if they price it right, and current management stays in place which I assume is the case it’s a brand new E&P to play with with Sprayberry, Granite Wash, fairly balanced O/G production. Bring it at a discount and I may like it. I’ll be on the call tomorrow. It’s been awhile since we’ve had fresh meat in the space.

  51. 51
    rseidman Says:

    Z: Do you follow, or have an opinion on MWE?

  52. 52
    BirdsofpreyRcool Says:

    To fill in a bit of background — Chaparral Energy is a high yield issuer… they are currently rated Ca/CCC and have $1,400mm debt outstanding (bank and 2 high yield bond issues). No doubt, the company kinda needs the cash… and with that amount of debt to assets, it would be tough to pull off a typical IPO.

    The conference call should be interesting. I look forward to your thoughts. If a company doesn’t BK (as it is standing on the edge of the abyss), then the stock usually goes up. Just like the entire market did… it’s just a giant call option.

  53. 53
    zman Says:

    RS – Sorry no, I don’t follow gathering, pipeline or storage companies …just not my bag.

  54. 54
    rseidman Says:

    And, btw, the site is working great today.

  55. 55
    zman Says:

    Thanks BOP, that’s more debt than I knew about. Will still be on the call. Sounds like $1.8 B IPO basically to clean up the balance sheet and pay for the SPAC buy. More important than ever they price it right on a $/reserve basis … need an update on what they think proved is now as the ’08 numbers are stale. They would not have added much through the drill bit but am wondering if a new look at some of those plays (again eying big potential in Granite Wash for horizontals) could mean we see an upward revision.

  56. 56
    zman Says:

    RS – does it seem to refresh faster?

  57. 57
    isleworth Says:

    yeah BOP, Jamba has been absolutely a disaster, but it was a pre-crash transaction. SPAC purchases have to be approved by a super majority of the SPAC shareholders. They have to sign a Letter of Intent for a merger within 12-18 months of the SPAC going public, and then close within 24 months. If they don’t they have to return roughly 98% -100% of capital put up by shareholders which has been held in trust. Those shareholders in today’s world are demanding that only great deals go forward.

  58. 58
    bloodystupidjohnson Says:

    GMXR is one of the stocks I have followed and trade for years. All this take over talk have gotten my spirits up so I just decided to give the Nov 17.50’s a try.

  59. 59
    bondbuddha Says:

    Jerome, your analysis has been spot on lately, where is a good add for KOG?


  60. 60
    BirdsofpreyRcool Says:

    isleworth — your points are valid. I haven’t looked closely at URX, but they IPO’d in Dec 2007. So, a pre-crash SPAC structure. That said, you are right about the super-majority and getting most of your cash back, if the merger doesn’t go through. Also, I don’t know the warrant situation in the URX structure… but some funds used to buy SPACs to get the shares plus warrants, then sell the warrants for a profit, or the stock for a profit, then continue to hold the warrants “for free” or the stock at a discounted value. Some of that stuff can affect the voting, regardless of how compelling the merger valuation is. But, the SEC has tightened the provisions for a SPAC to be registered, so perhaps this one will be free of some of the behind-the-curtain stuff that can go on, in this type of structure.

  61. 61
    ram Says:

    APC was close to 70 before retreating. Is the muddy Ghana confusion adding to the pullback?

  62. 62
    bill Says:

    ty for your thoughts on 35

    Nm has a spac outstanding, nna navious acquistion corp. Also has warrant which i own nna-wt . if they get a deal done the warrants are exercisable into shares of the spac, no deal the warrants are worthless. Im betting that nm ceo, gets her hands on the spac’s cash

    Sometimes, ship owners drop their ships into the spac, then charter back the ship for 5 years or more. The owner gets the cash, the spac owner gets a dividend supported by the lt charter

    osg did that with dht double hull tankers

    its a better deal for the sponsor than it is for the spac buyer

    as isle said in 57 “shareholders in today’s world are demanding that only great deals go forward” and some of those hedge funds would prefer to get their cash back
    I also saw one deal not happen, exm oceanaut ran out of time plus they couldnt please the spac owners with a deal that worked

  63. 63
    zman Says:

    Ram – I think its just profit taking. APA hit $100 and pulled back, EOG down similar. Just looks like if you are big cap E&P you are either down 2% because you had a good run or your name is CHK and you have an analyst day tomorrow or your are DVN or XTO and people think you haven’t had enough of a run yet.

  64. 64
    rseidman Says:

    A big YES on #56

  65. 65
    zman Says:

    Bill – been meaning to ask you. Last I checked you were still negative on the drybulk space. Watching the charts they look to be basing, maybe with a small upturn to correspond to an uptick last week in rates (at least for the Capesize and Panamax ships). I don’t see much reason for rally, maybe an upturn for depleted inventory restocking but beyond that I don’t see much pull for their services. Can I get your thoughts?

  66. 66
    kyleandy Says:

    bsj – nice timing on GMXR

  67. 67
    zman Says:

    RS – thanks much. I thought so as well. We had to repoint the DNS so it may be slow for some vs others as it repopulates across the internet (or so they tell me). I have a call with them later and there still exists the possibility that the site will go down some this week but here’s hoping with fingers cross that it does not and that the new better-string-between-tin-cans-server improves site performance.

  68. 68
    BirdsofpreyRcool Says:

    INTC reports tonight after the close… stock just hit a 52 wk high

  69. 69
    bloodystupidjohnson Says:

    In the for what its worth department:
    Yesterday, in the Houston Chronicle, Arthur Berman says that gas shale may be the bubble to burst. He says based on the Barnett Shale, that the yields from the shale wells will be high enough or last long enough to make these gas shales profitable, even with the rise of gas prices.

  70. 70
    zman Says:

    BSJ – I assume he’s saying they “won’t” be high enough or last long enough. ? There has been some recent criticisms of the EURs by some studying well results. I defer to Netherland Sewell, Ryder Scott etc on well results that the companies are portraying.

  71. 71
    bloodystupidjohnson Says:

    Link to story, I think http://www.chron.com/disp/story.mpl/business/6664313.html

    PS: Z, another nice trade with HK.

  72. 72
    bill Says:

    Tanker rates are terrible and Id avoid all names. I bought puts on Nat as i expect q3 earnings and dividend to be cut. One area that supported tanker rates was oil storage. But as spreads (contango) has narrowed those incentives are going away and that oil will be delivered releasing the ships and rate support

    drybulk–the fundamentals are still weak.
    Many companies have too much debt and the asset values have fallen 50 % or more. New ships will be delivered in future , offsetting that, is lack of financing. Navious has been able to pick up new capes in the 60;s with pref stock. last year used capes were going for 135 m. The ceo owns 20% and she unlike some of her peers appears to be working for the shareholder. They added some new capes acquired cheaply and are on long term charters. Their avg tce rate will actually increase next year

    I don’t own any names currently but i have an eye on navious and buy it for trading purposes when it drifts to 4.50 then sell it when it hits 5.00

    Egle is another trader and play it between 4.50 and 5.00. They are in the smaller segment (handimax/supramax which have had better relative rates than the larger sizes.

    Dsx is a low debt, lower risk, and i would buy it when and if rates get better but not now

    Drys avoid at any price as I cant get by the fact that the ceo is a self serving crook. Its a bellweather for the group and the banks are working with them and others on the debt covenant issues,(asset values)

    I dont like gnk or exm either.

  73. 73
    Popeye Says:

    71 sounds like peak oil talking book.

  74. 74
    zman Says:

    Thanks Bill. You are thinking the same thing as me, better to keep watching for the most part and that the handysize, handymax names are more interesting (if you can call it that). My thought is that when we do see a recovery in traffic, it’s going to be good for the good balance sheet and bad balance sheet names alike and will carry on for awhile and then of course, to excess.

  75. 75
    kiaora Says:

    Bill….NMM is in the $12 range not the $4.5-5

  76. 76
    BirdsofpreyRcool Says:

    kiaora — there are two flavors of Navios… the company (NM) and the MLP NMM).

  77. 77
    bill Says:

    nm is the symbol

    nmm was a spinoff of nm and nm owns about 50 % of nmm

    copy of latest presentation


  78. 78
    jiveyjr Says:

    brieing says Citi is out with cautionary comments about FLSR and its German ops

  79. 79
    BirdsofpreyRcool Says:

    bill — fwiw, i also think highly of the NM CEO and mngmt team

  80. 80
    zman Says:

    BOP tells me we get API after the close tonight even though EIA data will be delayed until Thursday.

    On Thursday the Street’s is looking for:
    Crude: UP 1.15 mm barrels
    Gasoline: UP 1.0 mm
    Distillates: DOWN 0.2 mm

  81. 81
    bill Says:

    nm has used the mlp as a source of funding and also the sponsor of NNA the SPAC as another source

    I think the ceo Angelika Francou has a banking background

  82. 82
    BirdsofpreyRcool Says:

    some more details on the Chaparral/URX deal…

    Catsimatidis to Buy Into Oil Producer After Refining Hunt Ends
    2009-10-13 16:38:54.558 GMT

    By Jim Polson and Jessica Resnick-Ault
    Oct. 13 (Bloomberg) — New York billionaire John Catsimatidis set out to buy refineries when he formed a public blank-check company two years ago. He wound up instead using the money he raised to buy into a money-losing oil and natural-gas producer that tapped out its credit line.
    “Life changes all the time,” Catsimatidis, the 61-year- old Greek immigrant whose holdings include the Gristede’s Foods grocery chain, said today in a telephone interview. “We formed the company to pursue investments in energy. We found that this deal was the best for our shareholders.”
    United Refining Energy Corp., the special purpose acquisition company, or SPAC, formed by Catsimatidis, agreed to take public Chaparral Energy Inc. of Oklahoma City, the companies said in a statement late yesterday. New York-based United will pay about $300 million. United shareholders and Catsimatidis will own 41 percent of the merged company, which will keep Chaparral’s name and trade on the NYSE Amex exchange.
    Catsimatidis opted for an oil and gas producer after the recession eroded fuel demand, cutting profit margins on gasoline and diesel. He said United also considered buying part of SemGroup LP, a bankrupt U.S. oil trader. Catsimatidis abandoned a fight to direct the reorganization of SemGroup in July.
    The transaction with United, scheduled to close by Dec. 11, will give Chaparral a cash infusion to pay off debt and possibly the wherewithal to increase its credit line, the companies said.
    Chaparral, which had losses of more than $83 million combined in the past three years, has proved reserves equivalent to 146 million barrels of oil.

    ‘Best Deal’ Available

    “You have to balance cash flow with values and in the overall balance of things, this is the best deal we could offer” to United shareholders, Catsimatidis said. “Considering the dollar is getting weaker, I think the assets are worth a ton of dollars.”
    After paying down debt, Chaparral expects to negotiate a new credit line allowing it to borrow $400 million to $450 million, enough to nearly triple capital spending next year and lift production about 30 percent, Chief Executive Officer Mark A. Fischer, 59, said in a telephone interview.
    Chaparral has $1.16 billion of debt, including $650 million of bonds and $507 million of bank borrowings, Chief Financial Officer Joseph Evans said.
    The company’s banks blocked Chaparral from further borrowing after the company slashed its reserves assessment to reflect reduced energy prices, Standard & Poor’s said in an Aug.
    19 note to clients.

    Debt Covenants

    S&P estimated Chaparral’s debt at five times its earnings before interest, taxes and depreciation of assets. That ratio will need to get down to 2.75-to-1 next year to comply with debt covenants, S&P said.
    “With the additional equity in the company, I think the banks will feel better about it,” Catsimatidis said.
    United rose 2 cents to $9.96 at 12:22 p.m. on the NYSE Amex. The deal with Chaparral needs approval from holders of United shares and warrants.
    Chaparral’s management will run the combined company, and Catsimatidis will be executive chairman. Catsimatidis heads Red Apple Group Inc., whose holdings include the Gristede’s chain, filling stations and a Pennsylvania refinery.
    Catsimatidis ranked 212th on Forbes magazine’s 2009 list of the richest Americans with a fortune estimated at $1.65 billion.

  83. 83
    Nicky Says:

    Pete Najarean saying call buying vastly outnumbering put buying for INTC today.

  84. 84
    zman Says:

    Thanks, a little bird just sent me the FSLR piece. The fear of a Germany cutting back or eliminating subsidies has been with the stock for awhile. As others have said, Germany doesn’t want to become like Spain, where solar subsidies were cut and new project announcements evaporated. The election should have put some of these fears to rest but I’ll check what Citi has to say.

  85. 85
    zman Says:

    Nicky – thanks for that Pete comment, have the sound off today. Has he ever said whether or not his “heat seaker” actually is predictive of good news or if it’s just a matter of several someones buying calls early in the day, and then more people buying calls thinking the early call buyers must know something? My suspicion is that it’s the latter. Don’t get me wrong, strong results from INTC would be nice as I look to exit the last of my October calls in energy names in the back half of the week. But I’ve seen one analyst calling for a miss there too.

  86. 86
    zman Says:

    FSLR – Ok, had not seen Germany is indeed talking about cutting subsidies, no specifics yet, thanks for the heads up, will watch more closely for a little resolution. Citi points out that it could be a bit of a boost for German sales in early 2010 as sales are pulled forward from 2011 to get in on the higher subsidy. Thanks for staying on it. I am watching the stock and SPWRA for entries on the long side sometime over the next two weeks.

  87. 87
    Nicky Says:

    Someone else on Fast Money saying the banks are now priced ‘for perfection’ and he sees 20 – 30% of downside in them as we will get buy the rumor and sell the fact.

  88. 88
    zman Says:

    Nicky – hear ya. JPM in the morning, I continue to think there is upside to numbers from the investment banks as they were as busy as ever last quarter. On a name like JPM, they aren’t that far from their mid 2007 highs.

  89. 89
    Nicky Says:

    Only Najarean buying the close today – the other three all selling

  90. 90
    Nicky Says:

    Z – charts look to me as if even if we see a new high it is going to be sold.

  91. 91
    zman Says:

    Nicky – on the SP or Oil or both?

  92. 92
    cargocult Says:

    Bill, Thanks for the NM presentation and all your past insight on Drybulk and Tanker companies. I ignored you to my detriment when you said to exit all drybulk. hate to sell now at the bottom.

  93. 93
    Nicky Says:

    well i was thinking spx particularly but oil will follow imo.

  94. 94
    bill Says:

    Cargo, I also experienced pain and now a little bit smarter

    here is an idustry commentary out today

    Id be remiss if i didnt mention that drys picked up an upgrade today


    Questionable end user demand from the Steel Guru: “The global steel market is agog with news of
    turbulence in the offing as Chinese suppliers tighten their belts to offload insurmountable inventory
    generated over the last 2 months. Europe and India has already started feeling the heat with offers
    plummeting week on week by nearly USD 50 per tonne in last fortnight. Middle Eastern market which
    remained dormant during the happenings owing to Ramadan has opened recently after a month long
    recess. Eyebrows are raised and much activity is anticipated. However the buyers and stockiest have
    receded into a huddle even before the market could gather a modicum of mobility.”
    Though the ATS Report – a crude oil report – points out an area of much needed end user demand :
    “Indeed the Economist has reported back in June that reported that China and other economies were
    already leading the world out of the global recession. Contrary to the popular belief that China and other
    emerging markets are mainly manufacturing goods for the developing world, there has in fact been far
    higher growth rates in consumer spending in Asia than in any other part of the world.”

  95. 95
    bill Says:

    tell me if you can open this link


  96. 96
    bill Says:

    assuming yes to 95

    here is another good one


  97. 97
    cargocult Says:

    Bill, No problem opening link.

  98. 98
    bill Says:

    if you register (free) on capitallink.com

    you can read daily snippets on the industry under the presentation and reports tab…then go to industry reports

  99. 99
    Jerome Blank Says:

    Re:#59 KOG technical update, hi bondbuddha…no worries here…KOG remains on a solid P&F buy signal and went back into x’s yesterday with the print of $2.75, KOG tried to break out of the daily consolidation triangle intraday, but fell back into the range by the close…the traditional daily chart shows KOG is riding the daily 20 period daily SMA higher which continues to hold support, even today, so a pullback to $2.45 intraday might be the spot to consider…with the move back into X’s KOG remains on a buy signal until a print of $1.75… there is add’l support at the triangle base, $2.25 to 2.35, and strong P&F support at $2.00, KOG remains a buy until a print of $1.75…initial price obj remains $3.25, unless I hear bad fundamental news from Zman or BOP, I’m holding and will try to add at these levels, if it gets there…

  100. 100
    cargocult Says:

    The oil in tanker storage is like a snake with a pig in its belly. Short term pain when it hits the market but getting it digested can only be a plus long term.

  101. 101
    bondbuddha Says:

    thank you sir

  102. 102
    kyleandy Says:

    BILL – who else besides NAT is a tanker stock. looking for a short candidate. thks

  103. 103
    bondbuddha Says:

    ONAV is a product carrier

  104. 104
    zman Says:

    Fed’s Kohn says data shows economy turned up in 3Q. Should not be a shocker but saw it cross. Kohn says he does not expect a V shaped rally. Says inflation expectations might fall and that deflation is a bigger threat.

  105. 105
    zman Says:

    CHK drifting up into their meeting tomorrow. Had toyed with playing it directly but will stick with holdings in those who are likely to benefit from positive comments in either the Haynesville or Fayetteville (HK and SWN respectively)

  106. 106
    zman Says:

    FYI, getting email bounce backs from the ZBLAST on ATT text messages today.

  107. 107
    Jerome Blank Says:

    Crude Oil printed a qaudruple top P&F buy signal with the print of $74 today. Crude is now back on a buy signal. Price obj at this point is $90, but the obj can change depending on price action.

  108. 108
    1520sbroad Says:

    Z – how does CHK run their meeting tomorrow? Do they put out a presentation release in the morning? Run a webcast? or is it closed door with analysts and then we all read the tea leaves as everyone publishes?

  109. 109
    zman Says:

    Thanks Jerome, just watching it print near HOD at the Nymex close.

    1520 – Last year if I remember correctly it was an all day webcast with multiple presentation files or one big one, available just before the meeting.

  110. 110
    zman Says:

    The meeting will be webcast live on the Internet from 9:00 a.m. EDT to 4:00 p.m. EDT on Wednesday, October 14. The webcast and presentation material can be accessed by going to Chesapeake’s website at http://www.chk.com and selecting the “Events” subsection of the “Investors” section on the website. The replay of the webcast will be available on the website approximately three hours after the conclusion of the event and will be accessible for two weeks.

  111. 111
    zman Says:

    1520 – adding to that, I’ll be looking through the presentation material as soon as it becomes available looking for anything incremental to the story. I plan on listening to the meeting as well.

    And now a word from someone who is not my sponsor. I listen to a lot of conference calls and will be on my Sennheiser wireless headphones for the CHK call. Cheap, reliable, and preferable to a catheter for that really long call.

  112. 112
    zman Says:

    HK back to $26.

  113. 113
    BirdsofpreyRcool Says:

    [grumble, grumble….] i bid on those HK Oct26 calls just after you did, but missed them… decided “not to chase.” BIG MISTAKE — fab wild z-trade!

  114. 114
    BirdsofpreyRcool Says:

    odd that KOG is trading just over it’s LOD… with oil being the new gold (as we continue to deficit the dollar).

    things that make you go “hmmmmmmmmmmmm….”

  115. 115
    zman Says:

    BOP – just a quick one there, don’t plan to be around in that position much longer.

  116. 116
    BirdsofpreyRcool Says:

    z — didn’t think so… 150% (or so) in one day is usually considered a decent trade.

  117. 117
    zman Says:

    True enough but its really a bet on INTC, JPM, and retail sales, maybe API tonight as well. Better roll longer and take something with 3 days of life and a habit of dropping inconveniently off the table.

  118. 118
    BirdsofpreyRcool Says:

    make that up 175% for the day…

  119. 119
    zman Says:


    Sold 100 HK $26 Calls for $0.55, up 128% to my average cost.

  120. 120
    zman Says:

    $10KP II now about 90% cash.

  121. 121
    ram Says:

    Seems naked not to have HK calls.

  122. 122
    BirdsofpreyRcool Says:

    ram — that’s funny! lol

  123. 123
    zman Says:

    Hear ya Ram, won’t be as long there as it will be for some others before I’m into the Novembers.

    The stock is taking out yesterday’s high so it may run, so I left some on the table which is not something I care much about.

  124. 124
    zman Says:


    SWN – Added (5) November $47 Calls (TKQKU) for $2.00 with the stock at $45.30. Playing for a gas bounce, earnings, potential positives from CHK’s analyst call tomorrow. Will be selling the remaining $45 calls soonish.

  125. 125
    kyleandy Says:

    bop – re KOG just checked SOME OF the other SDM’s (HDY,WRES, GST) and they are all down too. makes it not quite so bad!!

  126. 126
    BirdsofpreyRcool Says:

    thanks, kyleandy… i was beginning to take it personally.

  127. 127
    Jerome Blank Says:

    BOP, kyleandy…unless there has been a material fundamental event, this price action is more of a buy opportunity than a worry

  128. 128
    zman Says:

    Jerome – went back and looked and can’t find where you last commented on SWN. Would you mind taking a peek? Thanks.

  129. 129
    kyleandy Says:

    JEROME – when u have too much of your money invested in KOG and they have several wells being completed as we speak, there is always some worry!!!

  130. 130
    zman Says:

    Salient Point From Last Week Watch:

    … On aggregate size, that’s a comfortableness issue with the stock and the story of the stock at the time. The higher my comfort level, the more I’m willing to commit. I try not to do anything that won’t let me sleep at night in terms of overweighting or stepping out on strike vs current price.

  131. 131
    Jerome Blank Says:

    I can appreciate that Kyleandy…

  132. 132
    zman Says:

    Did anyone see a Janney response to Citi’s comment on FSLR today?

  133. 133
    zman Says:


  134. 134
    ram Says:

    Is this site suppose to refresh faster?

  135. 135
    zman Says:

    Ram – It should within the next few days. I’m seeing some quick and some slow response times.

  136. 136
    zman Says:

    CSX reporting in line revenues, looks like a bottom line smallish beat on weak looking estimates. Stock bidding up a buck from the close.

  137. 137
    zman Says:


    EPS of $0.33 vs $0.27 exp
    Rev of $9.4 B vs $9.015 B exp

  138. 138
    zman Says:

    INTC Sees 4Q Revenue of $10.1 B, Street at $9.5 B

  139. 139
    BirdsofpreyRcool Says:

    HeadTrader calling the INTC news… and i quote here…


  140. 140
    BirdsofpreyRcool Says:

    CSX saying the worst of recession is over…

    HeadTrader saying “HUGE” again.

  141. 141
    zman Says:

    Thanks for the HT color BOP, agreed, big results, good margins at INTC are nice but the top line beat is what people really want to see.

    I plan to be on that 8:30 EST CSX call by the way. Good macro demand comments from them.

  142. 142
    zman Says:

    Anyone see API yet?

  143. 143
    zman Says:

    Oil moving higher in the after hours, looks to coincide with API but I guess could be a futures based move off of an expected bump in INTC.

  144. 144
    zman Says:

    I have a Reuters story showing API will be delayed until Wednesday evening.

  145. 145
    Jerome Blank Says:

    Re: #128 SWN is currently on a P&F buy signal, its had difficulty breaking out above resistance at $46, but the current buy signal takes SWN to a price objective from here at $64…SWN goes back into o’s prior to breaking $46 on a print of $43, which might be a good place to consider long positions…strong confluence of support at $40…

  146. 146
    zman Says:

    Muchas Gracias Jerome.

  147. 147
    JD Says:

    Z…here you go (dk how to attach charts):
    The Pauses That Refresh
    Third quarter corporate earnings are already off to a good start after Alcoa led the nascent charge last Wednesday with better than expected numbers which may continue the trend from the second quarter. As reports emerge, analysts will pay attention to how much earnings beat expectations as a result of cutting expenses vs. revenue growth, as costs can only be cut so much while revenues may provide a better read of the consumer and of overall economic conditions.
    Technically, the U.S. equity markets continue to look positive. The third graph below is a monthly chart of the S&P 500 (SPX). It is in its eighth month of an upward trend which began in March, and the SPX is in its second month above the red line or 200 period Moving Average. This is significant as a long-term trend indicator and of general market direction. Additionally, the red 200 MA now appears to provide support to the SPX, and the MACD is pointing higher.
    The second chart is a weekly graph of the QQQQ or Exchange Traded Fund for the NASDAQ 100. This is also a very constructive chart, as the Qs have now risen above the green 21, blue 50 and red 200 period Moving Averages.
    The first chart is the SPX daily which also remains positive but keeps giving me concern. A few times over the past several months I have mentioned the potential for market pullbacks or breathers, and as such I have been cautious of a larger market pullback. What have occurred, however, are more in the category of a series of mini-breathers or pauses which are apparently refreshing just fine. After each of my last three updates the SPX has paused for a breather, -3.7% after Aug 7, -4.6% after Aug 31 and -5.6% after Sep 25.
    While I do not as readily see an imminent pause at this time, the DJIA is only 115 points from 10,000, and the SPX is only 24 points from 1100, both of which levels may serve as resistance or put a short-term lid on any rise. Nevertheless, a few good upside earnings reports could move the markets up through these levels in short order.
    I closed all puts and inverse ETFs on Oct 6, the day after the markets bounced, and positioned rather aggressively with calls. The SPX is up 5.5% from that point.
    As the market appears a little in limbo here from a technical view, I would rather wait for another refreshing breath before adding new positions.

  148. 148
    PackMan Says:

    Crazy Ivan – great term. Hunt for Red October.

    not been here much lately; a bit distracted; missed a lot of Z upside and not happy about it ! My bad.

  149. 149
    PackMan Says:

    HK: http://finviz.com/quote.ashx?t=hk

  150. 150
    PackMan Says:

    Hasn’t everyone been saying “the worst of the recession is over”.

    That’s not exactly new news. We’ve been hearing that line for months.

    Along with “things aren’t getting worse” or “the rate of decline has slowed”.

    Or “things SEEM to have stablized”.

  151. 151
    ram Says:

    Nicky, I finally found it. Last thursday,#2, you mentioned a Gann turn on Oct. 13/14. Is this turn a possible short term top? Gann turn, Crazy Ivan, you say potato, I say potato.

  152. 152
    West Says:


  153. 153
    zman Says:

    Oil trading 74.94, hit 74.98 a little while ago. Dollar hitting fresh lows.

  154. 154
    West Says:

    Lets see if this will post now 4th try. Usually only let you have 2 free quotes a day…….http://www.stockconsultant.com/consultnow/basicplus.cgi?ID=sample&symbol=KOG&72199

  155. 155
    zman Says:

    West – thanks for the headsup, spam filter didn’t like em for some reason.

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